Firsthalf hit for Ryman Healthcare

AUCKLAND: Ryman Healthcare spent $50 million on its pandemic response to protect residents and staff, despite no Covid19 among 12,000 residents and 6100 staff.

Since January, that has been the cost to the Australasian retirement village developer and owner, which has its headquarters in Christchurch and is New Zealand’s biggest business in the listed sector.

Its firsthalf profit fell 14.2% to $88.4 million.

The company’s investor presentation carried the line, ‘‘$50 million investment in Covid19 measures since January 2020.’’

Chief executive Gordon MacLeod said the pandemic had increased costs and restricted sales and construction activity in key markets.

However, with lockdowns lifting in Victoria and a buoyant housing market here, the company was expecting conditions to improve in the second half, and it had a record number of new villages in the pipeline to take advantage of the recovery.

‘‘It has been a tough six months due to the ongoing impact of the pandemic, which increased costs substantially and restricted our ability to sell in key markets during the extended lockdowns,’’ Mr MacLeod said.

‘‘While there is likely to be . . . ongoing uncertainty due to the pandemic, there is clearly a lot of pentup demand in the housing market and we are in a good position to continue to invest heavily in new homes and jobs.’’

The company anticipated secondhalf cash collections of at least $275 million from new sales, and had 12 villages in progress.

The profit was for the halfyear from April to September 2020.

Total assets now stood at $8.34 billion, up 14.9%. Ryman had a ‘‘resales bank’’ of $945 million, which it said underpinned future growth and resilience.

It did not say this, but many resales happen when properties are vacated because people get sick or die; the business has significant potential turnover from that activity.

Ryman makes a 20% to 30% development margin when it builds new villages.

It said it was now building across 12 sites, up from just four two years ago.

Shares are trading at about $15.50, giving a market capitalisation of $7.7 billion. The price dropped sharply in March when the pandemic struck, falling as low as $6.60. Shares had traded as high at $17 earlier this year — by April, they were back at $10.

However, the share price has risen steadily since.

On August 13, shareholders at Ryman’s online annual meeting heard from chairman David Kerr that the pandemic had actually ‘‘reinforced the attraction of living in our villages where residents enjoy security, companionship and a strong sense of community’’.

Only about 43,000 New Zealanders live in retirement villages, according to a study by real estate specialists JLL.

In the full year, Ryman’s audited underlying profit was $242 million, up 6.6%, driven by strong demand at new villages.

The reported, or IFRS, profit was down 19% to $265 million due to Covid19related property valuation changes.

Ryman has hit community opposition to some of its plans lately.

Kohimarama residents want the Auckland Council to reject a $150 million Ryman Healthcare retirement village plan which they say breaches height limits by more than double.

The company’s plans in Melbourne’s Coburg have met opposition, too — from local Peter Robertson, who said its application for a new village there had lapsed due to inaction. Ryman in return denies that and says it needs to start by next February and it would seek an extension. — The New Zealand Herald